Guangzhou Shipyard International, which makes tankers, said it would report a profit of more than 880.8 million yuan for last year, up by more than 200 per cent from 2006 due in part to greater efficiency. Shares in the shipyard rose 5.6 per cent to close at HK$31.10 yesterday although the profit growth was widely expected. An analyst said the market consensus had been for earnings per share to be between 1.82 yuan and 1.85 yuan last year, which would be about 200 per cent growth. Guangzhou Shipyard said an increase in efficiency, a decrease in interest costs and the adoption of forward contracts on currency had lifted profits last year threefold from 2006, according to Chinese accounting standards. The company reported 293.6 million yuan in net profit or 59 fen per share in 2006. 'We expect to receive 23 new ship orders this year, same as last year,' company secretary Li Zhidong said yesterday. Mr Li said tanker prices would have modest growth this year due to the rise in raw material prices. Shares in Guangzhou Shipyard plunged 53 per cent during the past three months on speculation that shipowners might trim orders because of the fall in freight rates. 'The investors have overreacted to the drop in the Baltic Dry Index,' which reflects freight rates in dry bulk, said the analyst. 'But Guangzhou Shipyard is making tankers not dry bulk vessels.' The Baltic Dry Index has dropped almost 50 per cent since its record high in November. However, the rates for tankers were stable over the same period. Shares in international shipyards had a slow start this year as South Korean shipyards said new contracts would be 20 to 30 per cent fewer than last year. Because Korea is the world's biggest shipyard, the market sees it as the benchmark. Guangzhou Shipyard's shares underperformed its peer group in part because it failed to acquire assets from its parent, China State Shipbuilding Corp. 'This year will be as good as last year in the tanker sector,' said Mr Li. 'The recent oil leakage from a tanker in Korea will put pressure on shipowners to replace single-hull tankers with double-hull tankers.' Analysts said Guangzhou Shipyard might suffer from a sharp tax increase this year because the concession period ended last year. This will bring the tax rate to 33 per cent from 15 per cent. The firm is applying to be included in the high-technology enterprise category to maintain its low tax rate, but the concession will not be granted until next year. Last year was a record for the industry, especially on the mainland, due to cheap labour and a huge expansion plan by shipyards. The mainland is also expected to have overtaken Japan as the world's second-largest shipbuilder last year in terms of vessels built. China State Shipbuilding, the mainland's largest shipbuilding conglomerate, expects to triple its vessel output to 18 million tonnes in 2010 from six million tonnes in 2006.